West Haven city leaders weighed a grim choice on Tuesday night at a special meeting.

They had to decide on a new budget or face even more state control.

Mayor Nancy Rossi says she and her team were working on the budget all day on Tuesday.

Rossi said she’s hopeful the council will adopt one on Tuesday night, because if they don’t have one by next week, the state’s municipal accountability review board, which has been working with the city to get its finances in order, could come in and have even more authority.

The city has been meeting with the municipal accountability review board since January.

On Tuesday night at the meeting, just about everyone cheered loudly when the budget, which includes a one mill tax increase was passed unanimously.

City leaders how this will keep MARB from exerting what they call lever four control, the highest possible lever over the city's finances.

This means the state could appoint a fiscal manager to oversee municipal operations, approve budgets, serve as an arbitration panel, along with approving debt restructuring and deficit financing.

"I think it would be a bad thing for the town because we're giving up all control, not only but from the mayor's office, but from the legislative body as well," said Rossi.

An unexpected twist emerged that may cause the MARB to reject the budget.

Right after the budget passed, the council created a $1 million hole in it by rejecting a planned tax lien sale to a private company that would have provided cash up front for liens.

Councilman Aaron Charney voted against it because he feels collection agencies target the poor.

"Why should we not keep doing business as usual, we have to start. The taxpayers elected us to do stuff different than usual," said Charney.

Charney is just one of three council members who voted against it. Six voted yes, but in West Haven, seven votes are needed to pass a measure.

Earlier this month, city council failed to adopt Rossi’s nearly $163 million proposed budget, so it went in by default.

The city was trying to fix a $3 million hole in the budget after learning it would be getting less money from the state’s municipal accountability review board than it originally planned.

The city had an $8 million revenue shortfall this year and it’s expected to be roughly the same next year.

Last year West Haven sold deficit bonds to finance the city’s more than $17 million deficit.

Rossi is disappointed especially because the MARB is slated to make their decision regarding more state control on June 8th.

The council could call for a special meeting to re-vote on the proposed lien sale before the state hearing and Charney said he would consider changing his vote if he received assurances there won't be similar sales in West Haven in the future.